Austria/ 5.1 General legislation  

5.1.5 Tax laws

In Austria, only an estimated 1.94% of the overall cultural funding is supplied by the private sector despite the existence of a "Sponsors' Ordinance" regulation adopted by the Federal Ministry of Finance in 1987. Under this regulation, an enterprise / entrepreneur is granted a tax break on expenses for sponsoring cultural events. The ordinance lists various criteria that must be fulfilled in order to qualify for the tax break (sponsoring must, for example, be in the form of an advertisement). This regulation only allows for a very small amount of expenditure to be tax deductible; however, plans for the introduction of new legislation, which has long been discussed, have been announced.

A study commissioned by the Arts Department of the Federal Chancellery was concerned with the effects of these planned tax breaks on the purchase of art objects (Österreichisches Institut für Wirtschaftsforschung (Wifo), 2002). Regarding the benefits of these tax breaks, the study estimated that the market potential of private households and enterprises is between 50 and 70 million EUR.

On the basis of an amendment to the Federal Arts Promotion Act (1988) in 1997, certain public subsidies are now tax free, retrospectively to 1991. These include: grants, prizes and supplements from the Austrian Film Institute for promoting the creation of film concepts and screenplays; income and assistance from public funds or from the funds of public or private foundations, as far as compensation for expenditure or expenses is concerned, or - with the exception of private foundations - for activities abroad.

Amendments to the Tax Law in 2000 provide that an estimated 12 per cent (not more than 8 725 EUR per annum) of artists' / authors' income is tax-deductible. Furthermore, their (often irregular) incomes can be spread over three years (income averaging). Also in 2000, tax privileges for foreign artists taking up residence in Austria were introduced: foreign creative artists can now apply for the partial or full cancellation of tax liabilities in Austria that are in excess of tax liabilities in their country of origin if their establishment of residence serves to advance art in Austria and if there is public interest in their work.

A new legal incentive was introduced in October 2002 which stipulates that donations made to museums (to important country-wide private museums, as well as to federal museums) are tax deductible.

There are two tax rates under the Austrian VAT Law (1994), one at 20% and a reduced rate at 10%. The reduced rate applies to turnover related to artistic activities, cinema, theatre and concert tickets, museums, botanical gardens or nature parks, as well as services by the Austrian Broadcasting Corporation (ORF) and cable TV companies, books magazines and dailies. There is 20% VAT on music CDs.